The Chicago-based mutual fund research firm, Morningstar Inc., is going public.
The firm has filed for a US$100 million IPO in a deal to be handled by Morgan Stanley, Deutsche Bank Securities and William Blair & Co.
The prospectus reveals that, as of Dec. 31, 2003, Morningstar tracked more than 100,000 investment offerings, including 54,700 mutual funds and similar vehicles. It serves more than 3 million individual investors, 100,000 financial advisors, and 500 institutional clients and has operations in 16 countries around the world.
On Jan. 14, 2003, it purchased the 50% of Morningstar Research Inc. (“Morningstar Canada”) that it didn’t own for US$6,334,000 in cash. The purchase price was allocated to the acquired assets and liabilities based on their estimated fair values at the date of acquisition, with the remainder allocated to goodwill. Current assets were valued at US$674,000; property, equipment, and capitalized software represented US$223,000; $376,000 was allocated to other assets; liabilities were US$3.4 million and goodwill was valued at US$8.5 million.
The prospectus also reveals that the Morningstar Inc.’s revenue has increased by a compound annual growth rate of 28% over the past five years, largely because of strong internally generated growth. 2003 revenue was US$139.5 million, an increase of 27.3% over 2002.
According to the filing, the firm is pursuing four growth strategies:
- enhancing its position in each of its three market segments by building on the strength of existing products;
- expanding the range of services it offers individuals, financial advisors, and institutional clients;
- continuing to expand international operations; and
- strategic acquisitions.